OECD seeing less corporate opposition to digital era tax revamp

PARIS (Reuters) - A global effort to revamp international tax rules for the digital era is receiving less corporate push-back than past attempts, the OECD’s head of tax policy said on Tuesday.

FILE PHOTO: The logo of Amazon is seen on the door of an Amazon Books retail store in New York City, U.S., February 14, 2019. REUTERS/Brendan McDermid

The Organisation for Economic Cooperation and Development is sounding out businesses and interest groups on Wednesday and Thursday at a public consultation before it begins drafting much-anticipated reform proposals.

Corporate interests have in the past leaned hard against efforts to update international tax rules, which currently allow digital firms to keep tax bills lower than other more traditional companies.

However, OECD head of tax policy Pascal Saint-Amans said there was a change of tone judging from more than 200 comments the Paris-based policy forum received in a first call for input from businesses, accounting firms, tax justice NGOs and academics.

“We have a significant group of business people saying it’s probably time to do something,” Saint-Amans told Reuters ahead of the start of the public hearing.

The emergence of internet giants such as Google, Facebook and Amazon has pushed international tax rules to the limit because they are able to book profits in low-tax countries rather than where they customer is located.

Global reform of the rules had been debated for years with little progress until January when nearly 130 countries and territories agreed to tackle some of the most vexing issues, like when a country has the right to tax international transactions.

The OECD reform proposals will tackle on the one hand how to determine when a country should get the right to tax companies and on the other a minimum level of corporate taxation.

In the absence of reform, a growing number of countries are planning their own national taxes targeting mostly U.S.-based digital companies.

While opposed to unilateral national taxes, Washington is a relatively recent convert in favor of a wide-ranging international overhaul, although it wants a solution with a broader focus than just digital companies.

“Bargain will have to be made and ... the more extreme proposals will not attract consensus,” the U.S. Treasury’s top international tax official, Chip Harter, told journalists in Paris ahead of the hearing.

He added that the aim was to have the broad outlines of an agreement from the OECD in June, so that G20 finance ministers could give a mandate to thrash out the numerous technical details before a formal deal is signed in 2020.